In a strategic move to safeguard its oil exports, the United Arab Emirates has unveiled plans to construct a new pipeline that will circumvent the Strait of Hormuz. This initiative aims to counter potential disruptions, with completion anticipated by next year. The blockade of the strait, which was a conduit for 20% of global oil and seaborne gas prior to the Iran conflict, has persisted for nearly 11 weeks, contributing to a surge in energy prices and impacting Gulf economies.
Abu Dhabi’s crown prince, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, has instructed the UAE state oil company to expedite this confidential project. The new pipeline is set to transport oil from the emirates to the port of Fujairah by 2027, effectively doubling the current export capacity of the existing Habshan-Fujairah pipeline, which carries up to 1.8 million barrels daily to the Gulf of Oman.
Since Iran’s blockade of the Strait of Hormuz, which followed US and Israeli military actions on February 28, the UAE has relied heavily on the existing pipeline to maintain its oil exports. Alongside Saudi Arabia, the UAE stands as one of the few Gulf nations with alternative pipelines that allow crude exports without traversing the narrow passage between Iranian and Omani waters.
The UAE’s decision to prioritize a second pipeline comes shortly after its withdrawal from OPEC, ending a 60-year association and highlighting a rift with Saudi Arabia, the cartel’s de facto leader. This departure is poised to enable the UAE, OPEC’s third-largest oil producer, to increase its oil production beyond the constraints of OPEC quotas once the strait reopens and normal trade resumes.
Although details on the new pipeline’s capacity remain undisclosed, doubling the current output to 3.6 million barrels a day would position the UAE’s pipeline exports closer to those of Saudi Arabia, which transports about 7 million barrels daily from its eastern oilfields to the Red Sea port of Yanbu, exporting 5 million barrels. This development ensures the UAE’s capacity to boost oil exports even if the ongoing conflict endures or if a peace arrangement does not fully restore pre-crisis tanker flow through the strait.